The Environment Agency has called Ofwat's decision to exclude the Thames Tideway project from its final determinations of water price limits for 2005-10 a "missed opportunity," and accused the regulator of failing to provide a long term solution to the problem of sewage pollution in the River Thames.

Ofwat's final determination set the total investment level for water companies in England and Wales at £16.8 billion (see related story). Of this, £3.5 billion is earmarked for spending to address environmental problems.

However, despite the fact that Thames Water will be allowed to increase its prices by 24% over the period, it will not be enough to provide the budget for investing in the Tideway project - a 22 mile tunnel under the riverbed to carry storm water and sewage overflow away from the river and down to treatment works away from the City.

The Thames has suffered badly for many years from untreated sewage overflowing between 50-60 times per year from London's ageing sewer system. Recently, the most severe example was in August when more than 600,000 tonnes of untreated sewage poured into the river as a result of heavy storms, killing hundreds of thousands of fish in a single day (see related story).

The Environment Agency has been seeking a satisfactory solution to this problem for several years, as part of the Thames Tideway Strategy Group which also includes representatives from Thames Water, Defra, Ofwat and the GLA.

Barbara Young, Chief Executive of the Environment Agency said: "A solution for the Thames Tideway needs to be agreed as soon as possible. The existing Victorian sewer system cannot cope with the scale of the twenty-first century city. Between three and five thousand people use the river for watersports. (see related story) The overworked network is creating pollution, health risks to river users and sewage flooding in homes. We need a strategic long-term solution, not palliative measures."

Whilst Ofwat's determination will provide necessary upgrades for London's sewage treatment works, and will include work on interim measures and investigations into the storm overflows, no immediate provision has been made for a long term solution. These investigations will, however, assess the future requirements of the Tideway, and will be submitted to Ministers in February 2005.

The Agency believes this will enable Ministers to make a decision on the most cost-effective long-term solution to protect the River Thames.

Jon Goddard, from the Environment Agency, who sits on the Thames Tideway Strategy Group said: "We will be re-submitting our further investigations next year and we are hopeful that as a result of this the planning stage of the project will be given the go-ahead."